The money that killed the innovation programme

At the present time, I'm hearing lots about innovation programmes around the world which have been terminated (or are under severe threat).I suppose that's not surprising given the present conditions facing banks. If innovation is considered a luxury, then of course it makes sense to cut it back right now. Innovation is a luxury whenever it is not connected to the money in some way. You either make new money or take out cost, or, indeed, you are incidental in times of crisis.

But I've found quite a few innovation programmes which have connected themselves to the money – or at least are beginning to do so . They are usually very well funded, and potentially have very senior level leaders who are able to influence at all the right levels.

They are still getting cancelled, even though all the preconditions for success are there.

I have a theory about why, and am trying to find evidence to back it up.

If you consider an innovation programme as a disruptive innovation in its own right, you swiftly come to the nub of the matter. Disruptive innovations always start small, and grow over time. They also usually have microscopic returns compared to mainline business investments.

Now, what this means is that whenever large amounts of money are committed to an innovation programme, it is being compared with mainline business investment like for like. But such comparisons are not like for like by any stretch of the imagination.

My theory is that any innovation programme with too much money will be cancelled because it fails to deliver big enough returns quickly enough to justify its resources.

What I am looking for is examples – stories and cases – from anyone whose seen this effect in action. I'll be writing it up later for everyone to review. So please email me (or comment here) if you have anything that supports – or refutes – this thought.

 

Comments

[david simoes-brown]

Hi James, interesting post. I am seeing examples of this happening although I can't really say where. This sort of belt-tightening had got me thinking about what is going to happen to innovation in the recession and I have a theory too. I think it will be mainstream innovation projects that will suffer. The bread and butter new product/service stuff. This is where most of the money goes and expectations are highest. The other extremes are business model innovation at the top end and incremental improvements in products at the bottom. The former offer hope of a lateral leap into new territory whilst the latter promise immediate return on investment. And both require less immediate investment.

[James Gardner]

I have now had three separate banks tell me this is their experience. Understandably, they are not happy to share in public.

I'll keep collating replies.

[Jeffrey Phillips]

James:

I enjoy your blog and wanted to comment on your supposition about innovation programs and funding.

The challenge from an innovation perspective is that innovation programs are often "funded" as if they were annual projects in an annual planning cycle. This means they are compared to other projects or products where the risks are more well known and the outcomes more definite. Innovation programs need to start small, with the minimum of funding possible, AND with the maximum of executive support, coaching and encouragement. Additionally, the funding for these programs needs to be separated from the annual planning cycle if at all possible, since the comparisons are too difficult. If an innovation program has a significant budget in this economy, it will be trimmed down, simply because the ax is falling on everything. What's more important to a good innovation program is executive sponsorship and commitment. Money can be found for great ideas. In this time of upheaval, can executive focus, commitment and time be found for innovation?

[James Gardner]

@jeffrey

THese are good points, and I think they echo what I was saying. The other day I was talking to an innovation leader whose programme has just been given a much bigger mandate, even in these times of challenge. The key success factor, it seems was starting small and growing into things, as well as all the other points you mention.